Kevin Crull: The media subsidy myth

The media subsidy myth

In his June 17 National Post op-ed (“A better model for the CBC”), author Wade Rowland argues in favour of making the CBC a “true” public broadcaster by eliminating commercials. But in doing so, the author also supplies misleading claims about Canada’s private broadcasters and their participation in the system.

Rowland provides an incorrect set of statistical and historical comparisons between the CBC and private TV broadcasters – all suggesting a create a false equivalency between the $1.1-billion in public subsidy to the CBC, and other government policies that apply to both the CBC and private broadcasters.

Rowland states that “the federal government currently subsidizes Canada’s private broadcasters to the tune of about $800-million a year.” In support of this claim, he suggests that production financing and tax incentives, as well as regulatory “perks,” should be considered “subsidies.” That’s wrong: These are clearly not “subsidies” for broadcasters such as CTV.

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For example, the Canada Media Fund, tax incentives, and other production funding mechanisms do not go to broadcasters: They are paid to independent producers.

These government programs are largely in place to stimulate employment, and are common in skilled and creative industries. Combining what broadcasters pay for programming with these funding sources, Canadian producers can create much higher quality television than what the market would naturally fund. But for the broadcaster, the resulting cost of Canadian programming is still higher than equivalent foreign programming.

Similarly, Rowland frames private broadcasting in Canada as a business of “purchasing American programming at a huge discount, stuffing it with commercials, and feeding it to a Canadian audience.”

American television programming is the most popular in the world. So, like every other English-speaking country, Canada’s private broadcasters serve their audiences by purchasing American programming for their market. But American programming fills less than 45% of our total schedule. As in every other English-speaking country, this programming supplements our own investment in domestic news and entertainment. In fact, Bell Media spent about $675-million on Canadian programming and production in the last broadcast year.

Say goodbye to mass-audience scripted series such Flashpoint, Rookie Blue, and Corner Gas. Is this scenario in the best interest of Canadian viewers?

However, Canada is the only country in the world where American channels are freely carried by cable and satellite distributors, dramatically impacting the value of the exclusive programming rights that Canadian broadcasters purchase. Without a solution to this problem, there would be no Canadian conventional broadcasting industry.

Rowland suggests that private broadcasters would continue to air news and weather information in his proposed new regulatory and financing model. But we wouldn’t, as we couldn’t afford to; the CBC would be the only source of Canadian local or national news.

He is correct, however, in that his model would result in only the “occasional” Canadian-produced drama from private broadcasters: Say goodbye to mass-audience scripted series such Flashpoint, Rookie Blue, and Corner Gas. Is this scenario in the best interest of Canadian viewers?

Four decades ago, Canadian regulators recognized it wouldn’t be in the country’s best interest, and created a simultaneous-substitution policy in regard to American-origin television signals, which Rowland has said represents part of the $800-million “subsidy” provided to private broadcasters.

Let’s be clear. Simulcast rules are neither a “subsidy” nor a “benefit.” Indeed, the CRTC’s policy statement of July 16, 1971 specifically said that simultaneous substitution was not some new benefit, but was, in fact, intended to fundamentally ensure that Canadian broadcasters could continue to exist.

This remedy in no way offsets the massive market disruption caused by U.S. networks. In fact, the television advertising industry in Canada is only half that of the U.S. when adjusted for population size, largely as a result of market integrity issues such as this.

Private broadcasters are more efficient and more effective at serving viewers and providing entertainment and information programming from a Canadian perspective

As a result, the financial pressure on private over-the-air broadcasters continues to grow. A sector that was once reasonably profitable is now a money-loser, as evidenced by last week’s CRTC report that indicated profits for Canadian conventional networks have plummeted 85%.

Regardless, private broadcasters are more efficient (measured by lower cost) and more effective (measured by larger audiences) at serving viewers and providing entertainment and information programming from a Canadian perspective. In the past four years, for example, CTV has had eight of the top 20 Canadian scripted programs, compared to CBC’s seven of 20. CTV also delivers Canada’s most-watched national and local news programming.

Nevertheless, we agree with the majority of Canadians that there is an important role for the public broadcaster in our television industry, and that the critical issues that all broadcasters face are worthy of public discussion.

CRTC chairman Jean-Pierre Blais recognizes the television industry is changing rapidly, and recently said “it’s time to ask if the assumptions that lie beneath our current regulatory policies still hold true.” With that in mind, the CRTC will launch consultations with consumers and industry participants this Fall.

While considering changes to the policies governing our industry, we should avoid the kinds of false equivalencies and inaccurate statistics Mr. Rowland presents. We need to remain squarely focused on the interests of consumers, creators, and citizens. We need intelligent discourse based on supportable facts so we can best predict an uncertain future, and lay the groundwork to serve Canadians well over the next 20 years, as we have over the last 20.

National Post

Kevin Crull is President of Bell Media, which owns 28 conventional stations, including CTV; 30 specialty channels; and 33 radio stations.